From Adviser Guide: Independent vs Restricted
Q: What impact will independence have on PI insurance?
On a direct comparison with restricted advice, the increased scope of independent advice will increase the potential for unsuitable advice or maladministration.
Andrew Power, lead Retail Distribution Review partner at Deloitte, warned as a result opting to remain an IFA may result in a comparatively higher premium for independent firms compared with restricted advice firms.
However, equally, Mr Power said the increase in professionalism of all advisers could have a downward impact on professional indemnity insurance premiums.
Mr Power said: “It is not yet clear whether the overall impact of RDR will increase or decrease PII premium for firms.”
George Higginson, chief executive of Sesame Bankhall Group, said availability of professional indemnity cover was likely to reduce – especially cover with realistic costs and benefits.
But Keith Richards, distribution and development director of Tenet Group, said the Leeds-based intermediary’s PI policy would not draw any distinction between restricted and independent adviser status.
He said this was likely to be similar across the market.
Mr Richards said: “We will not be increasing PI premiums for those that choose to remain independent.”